Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
16th Edition
ISBN: 9780134475585
Author: Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Textbook Question
Chapter 7, Problem 7.33E
Static and flexible budgets, service sector. Student Finance (StuFi) is a start-up that aims to use the power of social communities to transform the student loan market. It connects participants through a dedicated lending pool, enabling current students to borrow from a school’s alumni community. StuFi’s revenue model is to take an upfront fee of 40 basis points (0.40%) each from the alumni investor and the student borrower for every loan originated on its platform.
StuFi hopes to go public in the near future and is keen to ensure that its financial results are in line with that ambition. StuFi’s budgeted and actual results for the third quarter of 2017 are presented below.
- 1. Prepare StuFi’s static budget of operating income for the third quarter of 2017.
- 2. Prepare an
analysis of variances for the third quarter of 2017 along the lines of Figure 7-2; identify the sales volume and flexiblebudget variances for operating income. - 3. Compute the professional labor price and efficiency variances for the third quarter of 2017.
- 4. What factors would you consider in evaluating the effectiveness of professional labor in the third quarter of 2017?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
The employee credit union at State University is planning the allocation of funds for the coming year. The credit union makes four types of loans to its members. In addition, the credit union invests in riskfree securities to stabilize income. The various revenueproducing investments together with annual rates of return are as follows:
Type of Loan/Investment Annual Rate of Return (%)
Automobile loans 8
Furniture loans 10
Other secured loans 11
Signature loans 12
Riskfree securities 9
The credit union will have $2,000,000 available for investment during the coming year. State laws and credit union policies impose the following restrictions on the composition of the loans and investments.•Riskfree securities may not exceed 30% of the total funds available for investment.•Signature loans may…
Explain the market of loanable funds and your role as a A. borrower when you
buy your next vehicle AND B. saver after selling your first home and profiting
$100,000.
• You are opening your own small business. You will need the capital to begin your
business plan. Utilizing chapter 22 with figure 22.2. consider and explain your
timeline of production for your small business.
On subsidized Stafford loans, a common source of financial aid for college students, interest does not begin to accrue until repayment begins. Who receives a bigger subsidy, a freshman or a senior? Explain.
Found in MBA 640 Finance, Economics and Decision Making. Chapter 3 concept question #5
Chapter 7 Solutions
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
Ch. 7 - What is the relationship between management by...Ch. 7 - What are two possible sources of information a...Ch. 7 - Distinguish between a favorable variance and an...Ch. 7 - What is the key difference between a static budget...Ch. 7 - Why might managers find a flexible-budget analysis...Ch. 7 - Describe the steps in developing a flexible...Ch. 7 - List four reasons for using standard costs.Ch. 7 - How might a manager gain insight into the causes...Ch. 7 - List three causes of a favorable direct materials...Ch. 7 - Describe three reasons for an unfavorable direct...
Ch. 7 - How does variance analysis help in continuous...Ch. 7 - Why might an analyst examining variances in the...Ch. 7 - Prob. 7.13QCh. 7 - When inputs are substitutable, how can the direct...Ch. 7 - Benchmarking against other companies enables a...Ch. 7 - Metal Shelf Companys standard cost for raw...Ch. 7 - All of the following statements regarding...Ch. 7 - Amalgamated Manipulation Manufacturings (AMM)...Ch. 7 - Atlantic Company has a manufacturing facility in...Ch. 7 - Basix Inc. calculates direct manufacturing labor...Ch. 7 - Flexible budget. Sweeney Enterprises manufactures...Ch. 7 - Flexible budget. Bryant Companys budgeted prices...Ch. 7 - Flexible-budget preparation and analysis. Bank...Ch. 7 - Flexible budget, working backward. The Clarkson...Ch. 7 - Flexible-budget and sales volume variances....Ch. 7 - Price and efficiency variances. Sunshine Foods...Ch. 7 - Materials and manufacturing labor variances....Ch. 7 - Direct materials and direct manufacturing labor...Ch. 7 - Price and efficiency variances, journal entries....Ch. 7 - Materials and manufacturing labor variances,...Ch. 7 - Journal entries and T-accounts (continuation of...Ch. 7 - Price and efficiency variances, benchmarking....Ch. 7 - Static and flexible budgets, service sector....Ch. 7 - Flexible budget, direct materials, and direct...Ch. 7 - Variance analysis, nonmanufacturing setting. Joyce...Ch. 7 - Comprehensive variance analysis review. Ellis...Ch. 7 - Possible causes for price and efficiency...Ch. 7 - Material-cost variances, use of variances for...Ch. 7 - Direct manufacturing labor and direct materials...Ch. 7 - Direct materials efficiency, mix, and yield...Ch. 7 - Direct materials and manufacturing labor...Ch. 7 - Direct materials and manufacturing labor...Ch. 7 - Use of materials and manufacturing labor variances...Ch. 7 - Direct manufacturing labor variances: price,...Ch. 7 - Direct-cost and selling price variances. MicroDisk...Ch. 7 - Variances in the service sector. Derek Wilson...Ch. 7 - Prob. 7.47P
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Match each business description with the BEST model for fundraising. V A USC focused Matcha Cafe A. Bootstrap V A startup that wants to create NFTS for each cup of B. Venture Capital matcha it sells in the metaverse. C. Bank Loan V A Southern California Matcha Shop that has been in business for 10 years and wants to add another D. Friends and Family. location. a student company looking at creating a new and scalable matcha recipe to boost memory and performance.arrow_forwardPERFORMANCE TASK NO. 4 Solve the following problems completely. Read and understand the situation below, then answer the question or perform the tasks that follow. 1. A group of college students decided to invest the money they earned from the fund-raising project. After 6 months from today, they want to withdraw from this fund P 10,000.00 quarterly for 1 year to fund for community service. How much is the present total deposit if the interest rate is 4% converted quarterly? 2. A company offers a deferred payment option for the purchase of any furniture. Gladys plans to buy a dining table set with a monthly payment ofP 4,000.00 for 2 years. The payment will start at the end of 3 months. How much is the cash price of the dining set if the company will give 10% compounded monthly?arrow_forwardYou are serving as the chair for your community's annual wellness campaign. A key event is the annual Walk 3k, Run 10k, Ride 20k event. The event is staged entirely by volunteers and the goal is to attract community-wide awareness of getting active as a key step to wellness. In other words, the goal is not to raise money, but to prompt awareness. As the chair, you set a financial goal to break even on the one and only cost of the event, a fitness bag with the community seal and the event motto, “I AM ON THE RIGHT TRACK!” The cost of the bags, which must be ordered in batches of 100, are: Bags/ Participants Fixed Cost Variable Cost Total Cost Marginal Cost 0 $1,700 $ - $1,700 100 $1,700 $500 $2,200 [a] 200 $1,700 $1,200 $2,900 [b] 300 $1,700 $2,700 $4,400 [c] 400 $1,700 $5,200 $6,900 [d] 500 $1,700 $9,000 $10,700 [e] 600 $1,700 $15,000 $16,700 [f] 700 $1,700 $23,800 $25,500…arrow_forward
- Alumni donations are an important source of revenue for colleges and universities. If administrators could determine the factors that could lead to increases in the percentage of alumni who make a donation, they might be able to implement policies that could lead to increased revenues. Research shows that students who are more satisfied with their contact with teachers are more likely to graduate. As a result, one might suspect that smaller class sizes and lower student/faculty ratios might lead to a higher percentage of satisfied graduates, which in turn might lead to increases in the percentage of alumni who make a donation. The following table shows data for 48 national universities. The Graduation Rate column is the percentage of students who initially enrolled at the university and graduated. The % of Classes Under 20 column shows the percentages of classes with fewer than 20 students that are offered. The Student/Faculty Ratio column is the number of students enrolled divided by the total number of faculty. Finally, the Alumni Giving Rate column is the percentage of alumni who made a donation to the university. Managerial Report 1. Use methods of descriptive statistics to summarize the data. 2. Develop an estimated simple linear regression model that can be used to predict the alumni giving rate, given the graduation rate. Discuss your findings. 3. Develop an estimated multiple linear regression model that could be used to predict the alumni giving rate using the Graduation Rate, % of Classes Under 20, and Student/Faculty Ratio as independent variables. Discuss your findings. 4. Based on the results in parts (2) and (3), do you believe another regression model may be more appropriate? Estimate this model, and discuss your results. 5. What conclusions and recommendations can you derive from your analysis? What universities are achieving a substantially higher alumni giving rate than would be expected, given their Graduation Rate, % of Classes Under 20, and Student/Faculty Ratio? What universities are achieving a substantially lower alumni giving rate than would be expected, given their Graduation Rate, % of Classes Under 20, and Student/Faculty Ratio? What other independent variables could be included in the model?arrow_forwardThe employee credit union at State University is planning the allocation of funds for the coming year. The credit union makes four types of loans to its members. In addition, the credit union invests in risk-free securities to stabilize income. The various revenue-producing investments, together with annual rates of return, are as follows: The credit union will have 2 million available for investment during the coming year. State laws are credit union policies impose the following restrictions on the composition of the loans and investments: Risk-free securities may not exceed 30% of the total funds available for investment. Signature loans may not exceed 10% of the funds invested in all loans (automobile, furniture, other secured, and signature loans). Furniture loans plus other secured loans may not exceed the automobile loans. Other secured loans plus signature loans may not exceed the funds invested in risk-free securities. How should the 2 million be allocated to each of the loan/investment alternatives to maximize total annual return? What is the projected total annual return?arrow_forwardEmployee retention is a major goal for Dynamic Thermoforming, Inc.Feedback from the employees had focused on the need for a company-sanctioned retirement program. In response, the company will be offering a 401(k) retirement program complete with a number of different investment choices, including some of the top mutual fund families. In addition, the first 3% of an employee's salary contributed would be fully matched by the company. Quentin Avery, a sales manager with Dynamic Thermoforming, decides to put 3% of his $6,000 monthly salary into an international growth fund offered through the new 401(k) plan. The current net asset value is 17.94 and the year-to-date return is plus 4.9%. How many shares will Quentin be able to purchase each month, and what was the net asset value of the fund at the beginning of the year? Quentin will be able to purchase shares per month. (Round to the nearest hundredth as needed.) The net asset value of the fund at…arrow_forward
- In this semester, we study how funds flow in the financial system. Please explain with examples what can financial system do to help im prove the quality of our lives?arrow_forwardSuppose that you have been given a summer job as an intern at Issac Aircams, a company that manufactures sophisticated spy cameras for remote-controlled military reconnaissance aircraft. The company, which is privately owned, has approached a bank for a loan to help finance its growth. The bank requires financial statements before approving the loan. Required: Classify each cost listed below as either a product cost or a period cost for the purpose of preparing financial statements for the bank. 8 00-45-49 Costs Product Cost / Period Cost 1. Depreciation on salespersons' cars. 2. Rent on equipment used in the factory. 3 lubricants used for machine maintenance Salaries of personnel who work in the finished goods warehouse 5. Soap and paper towels used by factory workers at the end of a shift. 6. Factory supervisors' salaries. 7. Heat, water, and power consumed in the factory. 8. Materials used for boxing products for shipment overseas. (Units are not normally boxed.) 9. Advertising…arrow_forwardPlease read Chapter 5 of Hillier et al (2021) Fundamentals of Corporate Finance and answer the following questions. You should submit your homework to your class teacher via the corresponding moodle link. Be prepared to participate in class! 1. Oasis Pods has been working on a new sustainable business that uses plastic waste to create standard office pods that can be placed in free spaces in a building. The new office pod technology has now been cleared for manufacture and development. Oasis Pods anticipates the first annual cash flow from the office pods to be €2,000,000, received 2 years from today. Subsequent annual cash flows will grow at 10% in perpetuity. What is the present value of the new technology if the discount rate is 16%? 2. The Coop Bank charges 13.2% compounded monthly on its business loans. First Direct Bank charges 13.5% compounded semi-annually. As a potential borrower, which bank would you choose for a new loan? 3. A 25-year fixed-rate mortgage has monthly payments…arrow_forward
- Village Banking is prominently emerging as one of the funding options for upcoming small scale entrepreneurs. Conduct an appraisal of a Village Banking model highlighting in details its features, shortcomings and the suggested solutions to the said shortcomingsarrow_forwardFor finance explain the benefits of where a college student stands financially and ways they can grow successfully.arrow_forwardBudgeting is important not only for businesses. Also in our personal lives we have scarce resources, especially money and time, but also other resources like for example cell phone data, use of the family computer or family TV set, access to childcare etc. Our college prepares annual budgets as well. please look at line items 18 and 21. What do these dollar amounts tell you? What are your conclusions for the college? Share your observations with the class and discuss possible reasons for your observations.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Essentials Of Business AnalyticsStatisticsISBN:9781285187273Author:Camm, Jeff.Publisher:Cengage Learning,Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College PubEssentials of Business Analytics (MindTap Course ...StatisticsISBN:9781305627734Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. AndersonPublisher:Cengage Learning
- Century 21 Accounting Multicolumn JournalAccountingISBN:9781337679503Author:GilbertsonPublisher:Cengage
Essentials Of Business Analytics
Statistics
ISBN:9781285187273
Author:Camm, Jeff.
Publisher:Cengage Learning,
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Essentials of Business Analytics (MindTap Course ...
Statistics
ISBN:9781305627734
Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Publisher:Cengage Learning
Century 21 Accounting Multicolumn Journal
Accounting
ISBN:9781337679503
Author:Gilbertson
Publisher:Cengage
Inspection and Quality control in Manufacturing. What is quality inspection?; Author: Educationleaves;https://www.youtube.com/watch?v=Ey4MqC7Kp7g;License: Standard youtube license